Requirement 7 (17 MARKS)

: Record all of the transactions. PART 5: NON-CURRENT LIABILITIES-SECTION A (22 MARKS) United Health is considering two alternatives for the financing of some high technology medical equipment. These two alternatives are 1. Issue 50,000 common shares at $50 per share. 2. Issue $2,500,000, 5%, 10-year bonds at face value. It is estimated that the company will earn $900,000 before interest and taxes as a result of acquiring the medical equipment. The company has an estimated tax rate of 30% and has 100,000 com shares issued prior to the new financing.

Requirement 8 (10 MARKS): Determine the effect on profit and earnings per share for these two methods of financing. PART 5: NON-CURRENT LIABILITIES - SECTION B (12 MARKs) On January 1, 2017, Callahan Corporation issued $600,000, 9%, 5-year bonds, dated January 1, 2017, at 104. The bonds pay interest semi-annually on January 1 and July 1. The company has a December 31 year end. Assume amortization of $1,700 and $2,100 respectively for the first two semi- annual interest periods.

Requirement 9 (12 MARKS): Prepare the journal entries that Callahan Corporation would make related to the bond issue on the dates indicated below: July 1, 2017 December 31, 2017 January 1, 2018 January 1, 2017 4